That’s how NYS Insurance Commissioner Eric Dinallo characterized AIG’s derivative business during testimony yesterday. Mike Whitely of WorkCompCentral reported on the Senate hearings this morning, saying:
“American International Group’s financial products unit amassed a portfolio of shaky credit default swaps, futures and other derivatives with a notional value of $2.7 trillion before regulators stepped in to stop the bleeding last September, New York Insurance Supt. Eric Dinallo said Thursday.
“For context, that is equal to the gross national product of France,” Dinallo told the U.S. Senate Banking, Housing and Urban Affairs Committee. “Losses on certain credit default swaps and collateral calls by global banks, broker dealers and hedge funds that were counterparties to these credit default swaps are the main source of AIG’s troubles.”
There are lots of moving pieces here, but the most current problem is the inability of AIG to sell off assets to meet credit obligations. I discussed this issue in a series of interviews on Fox Business News earlier this week; the video is here and here.
Mar
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